Petersen Offers to Clear Debt of Namesake Auto Museum

The Petersen Automotive Museum, a tableau of Southern California motoring as well as an unprofitable gallery gridlocked by a multimillion-dollar debt, may be bought out by its namesake benefactor, The Times has learned.

Robert E. Petersen, 71, the retired automotive magazine publisher, declined to comment on terms of his proposal. But others involved in the negotiations confirm that at a Dec. 16 meeting of museum managers and officials of the museum’s parent, the Natural History Museum of Los Angeles County, Petersen offered to clear the remaining $24.6 million owed.

Not incidentally, insiders say, releasing the automotive museum from its debt would allow its management team to focus on marketing and advertising efforts aimed at boosting attendance, enhancing exhibitions and ultimately elevating the 4-year-old museum to international regard.

Further, they note, acceptance of Petersen’s bid would quiet bickering between county overseers, who are primarily focused on budgets and good business, and museum managers, whose talents are more rooted in a passion for fine automobiles and their place in local history.

“There are no real villains on either side,” said one person with a voice in the current proceedings, “just two groups with different agendas, two groups who share a sense of the Los Angeles community but who observe different pasts. Our task is to work a separation in a friendly, congenial, dignified way. Then go our separate ways in new and different directions.”

A Petersen bailout would promptly free the museum from its $2-million annual debt service and release the Natural History Museum from future financial and operational obligations of the auto museum.

Under final terms of the proposal, management policies and critical marketing and fund-raising activities of the Petersen museum--a well-received but generally unprofitable and rarely crowded attraction at 6060 Wilshire Blvd.--would be handled by a nonprofit foundation, sources said.

James Powell, director of the Natural History Museum, Petersen director Ken Gross and Los Angeles businessman Kevin Sharer, president of the Natural History Museum’s board of trustees, were at the meeting earlier this month but also declined to comment.

Others in attendance, however, said the Petersen proposal is being studied by the Natural History Museum’s trustees, its board of governors and its attorneys and that a vote on the issue could come as early as next month.

“These things are being discussed, but the legal forms involved have not been adopted,” said Bill Tilley, a food service distributor and developer of restaurant chains who is involved with both sides in the discussions. He is a car collector, a Natural History Museum trustee and a member of Checkered Flag 200, a group of automotive enthusiasts who pay dues of $1,000 a year and function as an advisory body for the Petersen. “Until any agreement is finalized, it is premature to discuss the outcome.

“For the Petersen to become what we all want it to be will require substantially greater investment. But I’m confident [that] in final form, the people of Los Angeles will be even more proud of this magnificent museum,” Tilley said.

Underfinancing, according to those familiar with museum operations, has plagued the Petersen since its inception.

The $40-million project was funded in large part by a $28.5-million tax-exempt bond issue approved by the Los Angeles County Board of Supervisors in 1992. Local car enthusiasts--among them Bruce Meyer, former owner of Geary’s of Beverly Hills, and Otis Chandler, retired publisher of the Los Angeles Times--paid $250,000 apiece to have galleries named after them and to showcase their personal collections of vintage autos and motorcycles.

Of the initial funding, $11.1 million paid for the old Wilshire Boulevard Ohrbach’s department store, a derelict held in federal foreclosure by the Resolution Trust Corp. The rest went to repairs and restoration of the building, which for years had been a freebie hostel for squatters.

Robert Petersen, a self-made entrepreneur, devoted car guy and then-owner of a magazine empire that included such pioneer automotive publications as Motor Trend and Hot Rod, pledged $15 million--$5 million as an immediate endowment, $10 million after his death--to assist the project.

And at its gala opening, a night of Hollywood celebrities, limousines and floodlights, the Petersen Automotive Museum stood on Los Angeles’ Museum Row as a showcase for Southern California’s hopeless passion for autos, classic and contemporary, and undying motoring ways, ancient and modern.

But the Petersen’s $2-million annual debt service on the original $28.5 million in bonds became an impossible nut to crack. It was also a significant strain on the over-stressed budget of the Natural History Museum, which was forced to pick up the tab for the auto museum’s debts.

“Paid admissions, car club parties, corporate galas, special exhibits--these things paid for the daily, weekly, monthly operations of the museum,” said a former manager who requested anonymity.

“We actually were grossing twice as much as the Natural History Museum and the Page combined,” he said, referring to the George C. Page Museum of La Brea Discoveries, another member of the Natural History organization. “But it didn’t make any difference, because we still had the debt service.”

Making matters worse, he said, was a revenue shortfall created by the county’s initial, unrealistic attendance projections.

“The original estimate was 2 million visitors a year, or 40,000 a week,” he said. “We were actually getting 25,000 to 30,000 a month, and with no budget to advertise so we could improve those numbers.”

Operating the museum is said to cost about $2.5 million a year. Annual figures have never been released, but one source says revenue is expected to top $2 million this year.

From day one, others say, there were frictions, a head-on cultural clash between natural historians, scientists and academics on the one hand, and automobilians more consumed by Duesenbergs than dinosaurs on the other.

“Politics have been the problem all along,” said Dick Messer, one of four directors, interim and full-time, who have guided the Petersen since its beginning. “Academics don’t care about automobiles, they don’t understand the culture--they all drive Saturns--and in fact most of them see the automobile as a social evil.”

Messer, an avowed car enthusiast, says he was fired after two years in office by his Natural History bosses, “who just don’t get it . . . that the entire contemporary culture of Southern California is the automobile.”

Although most Natural History Museum officials are keeping silent on the Petersen offer, observers say they see no reason why the plan should not be accepted. Unless, goes one suggestion, there might be a fatter profit in the outright sale of the auto museum to a higher bidder.

“It has to go through hoops,” said Otis Booth, a Natural History Museum trustee and governor. Such as? “Well, that location is valuable for all general museum purposes . . . for natural history--or for automobiles.”